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U.S. Wholesale
By Brian Bossetta
With warmer weather finally settling in over most of the country, diamond wholesalers are reporting an uptick in sales. Business in 2014 for Harsheel Shah, vice president of sales and marketing at Prijems, a manufacturer of diamonds based in Los Angeles, had been “slower than normal,” which he attributed to the “arctic blast” of cold weather that had engulfed the nation. Recently, however, he reported “an increase in business, putting us ahead of last year’s numbers.” Sales have also spiked for Jay Gilbert, owner of Coast Diamond in Los Angeles. “Business is warming up with the weather,” Gilbert said. “We expected an increase because the cold weather had slowed business.”
Even more of a drag on sales than the cold weather has been tax season, according to Robert Wiener, owner of Worldwide Diamond Company in Los Angeles. “January through Valentine’s Day was busy, March and April less so,” Wiener said. “Tax season is worse for sales.” SI goods, Wiener said, have been his top sellers “unless VS goods have a big discount.” Oren Sofer, a partner at New York City–based loose diamond and jewelry supplier Beny Sofer, also cited tax season as a reason for a softening of spring sales, especially in luxury goods. That’s because paying taxes takes precedence over stocking inventory. “The first quarter has been consistent, we are pretty much even with last year,” Sofer said. “We continue to see the trend of online growing and traditional retail staying flat.” Eternity bands, diamond bands, diamond solitaire earrings and pendants have been Sofer’s most consistent sellers. Selling particularly well for Shah have been higher-end rose cut diamonds in D through F, VS plus. Those goods have been especially robust in Europe and Asia, he added. The bridal sector for Gilbert — his specialty — remains his top category, with the majority of his rings featuring better-make center-stone diamonds in G to H, SI1 to VS. “Halos are still the king, or queen,” Gilbert said. Saul Goldberg, president of William Goldberg Diamond Corporation in New York City, said his proprietary Ashoka brand continues to gain in popularity, with higher-ticket items — 3-carats-plus in VVS through FL — selling strong. “Fancy colors as well as exotic pinks and blues are doing well,” he added.
Goldberg also noted that the ongoing crisis in Ukraine has been a negative factor for the industry. “It’s been a bit quieter because of the turmoil going on with Russia,” Goldberg said, noting that Russian buying had declined since the trouble began. Jeff Fischer, president of Fischer Diamonds Inc., a diamond manufacturer in New York City, said the conflict presents a potentially bigger problem for the industry. “If the hotheads in Washington were to invoke serious sanctions on Russian products or put obstacles in place for Russian goods,” Fischer said, “then the compliance machinery starts to come into play, adding complications to an already complicated business.” Shah, however, was skeptical that geopolitics in Eastern Europe would factor in. “People and economies are very resilient,” he said. “And in this day and age of global media, there will always be a disturbance of sorts somewhere within the U.S. or the rest of the world that we have to contend with.”
On the whole, prices seem to be either holding steady or on the rise, depending on the categories of goods. “Prices have been stable, no increase or price resistance,” said Gilbert, referring mostly to his focus on bridal. “And we’ve had no trouble replacing inventory.” But Shah sees prices only going in one direction, “straight up,” at an increase he estimated to be 5 percent to 10 percent since the start of the year. “Pricing has been on a very strong upward trend with the emerging markets still picking up where others leave merchandise behind due to their reluctance to pay higher prices,” he said. Inventory, Shah added, has been easy to replace, albeit at “a higher price.” Wiener also noticed prices going up, particularly in SI, H to J, 1 carat to 2.50 carats. “There’s plenty of goods available, if you’re willing to pay the price,” Wiener said. Goldberg reported prices stable to “slightly on the strong side” with his hotter items — his higher-end exotic colors — hard to replace. The “maddening processing time,” as Sofer described it, for diamond grading at the Gemological Institute of America (GIA) has taken a “considerable chunk” of diamonds out of circulation. “It has also caused a strong firming up of prices on the smaller .50 points-and-less certified diamonds,” Sofer said. “Now, not only do you need to fund your manufacturing cycle, you have to add an additional two months of cash flow funding for the time that your diamonds sit idle in GIA.”Article from the Rapaport Magazine - May 2014. To subscribe click here.
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